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The outage at the Syncrude Oil Sands facility and its restoration has been one of intense speculation. Suncor announced they intend to bring the initial coker into service in the second half of July 2018 and outlined a schedule for the rest. 

Syncrude Facility Canada 

Syncrude is a joint-venture with majority owners Suncor Energy Inc. and Imperial Oil Ltd

The sudden power outage that took the 360 Mbbl/d facility offline in late June 2018 caused havoc in the crude markets at the end of June. The market was already volatile from OPEC and the uncertainty of delivery led to huge calender spread blowouts. Two days later Trump issued his ultimatium to Iran importers which sent oil contracts up over 10%. The market was primed for long speculation.

Syncrude Return to Service Schedule

  1. Intend to bring the initial coker into service in the second half of July 2018, which can produce 150 Mbbl/d once fully operational.
  2. In the the first half of August, the second coker will then be brought online which will add another 100 Mbbl/d in production capacity.
  3. With the third coker, Suncor must remove coke from the facility due to the nature of the sudden shutdown last month.
  4. Additionally, they will accelerate maintenance on the facility which was planned for the fall of 2018 and spring of 2019.
  5. Syncrude is forecasting pipeline shipments from Syncrude will hit 60-70% of capacity in August 2018, and full ramp-up will follow in mid-September 2018.
  6. Suncor will update its guidance when quarterly earnings are issued in late-July.

Syncrude has the capacity to produce 360,000 barrels of oil per day which is around 10 per cent of all Canadian oil production. Prices responded to the unplanned shutdown on June 20 as it had a significant effect on domestic and North American crude oil prices.

Following the shutdown the discount between Western Canada Selec and the West Texas Intermediate benchmark price shrank from US$25 per barrel to US$20 per barrel in the futures market as traders and analysts speculated on how long Syncrude would be offline. The oil markets will get a boost is that the pipeline space is now available for other producers to backfill and support drawing down some of the record western Canadian inventories which have been building since the second half of 2017. This also relieves the pressure on oil prices with supply being satisified elsewhere.

What happened at the Syncrude Outage

The sudden power outage caused some of the vessels at the plant to shutdown with products still inside, and those vessels need to be emptied before they can be cleaned out and inspected. The Syncrude upgrader has three cokers, which are used in the process to turn bitumen into synthetic crude oil.

"Preliminary investigation results indicate that the cause of the disruption was a transformer trip in Syncrude’s power house resulting in a rapid site wide loss of power and steam generation. As a result, all process units were brought down. There were no injuries or safety incidents as a result of this outage." Suncor said in their statement

Price action will be seen out on the curve as production comes on, or any changes in delivery.

Imperial Oil spokesperson Lisa Schmidt had said in an email in late June that restarting crude oil production at Syncrude could take “several weeks.” “Imperial is providing support to assist Syncrude with recovery efforts,” she said.

Suncor spokesperson Sneh Seetal said in an email on June 25. “We’ve allocated senior level resources to assist with the investigation and recovery path forward,” she said.

Stay in tune for any changes in the service schedule.

Source: Suncor, Criterion Research

From The TradersCommunity News Desk

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